Foundations: Fleas or Elephants?

Pam David is Executive Director of the Walter & Elise Haas Fund, a private foundation in San Francisco. She has worked extensively in local government (Director of the San Francisco Mayor's Office of Community Development) and nonprofits (community organizer). She is former Chair of Northern California Grantmakers, and currently serves on the board of the National Gay and Lesbian Task Force.

Pam, what have you learned about philanthropy since coming to it from government?

When I first came to work in philanthropy my first impressions were "No accountability, no urgency." Particularly compared to the multiple layers of public oversight and transparency in my old job, the differences were striking. And, although I'm no longer a philanthropy novice -- in September I will have been at the Haas Sr. Fund for eight years -- I remain struck by the lack of external accountability, urgency, and transparency in the field.

What I've found in this arena is that there is tremendous accountability to the trustees, and rightly so, but the only external accountability is what you yourself bring to the table. What mitigates this harsh picture is the depth of caring and commitment that so many trustees and staff bring to the work. I've been profoundly impressed with the thoughtfulness, intelligence, and heart that so many in philanthropy demonstrate, but the fundamental lack of external accountability is problematic.

Well, government isn't exactly famous for accountability and transparency, is it?

There's a whole lot more than most people realize. Local government gets a bad rap on this. When you call someone they usually return the call. They know that if they don't, you can go figuratively and sometimes literally upstairs to an elected official. If government doesn't award a grant or contract to your nonprofit, you can demand an explanation and usually file one or more appeals to ever higher bodies of decision makers. Government also has to publish the criteria for its selection process, the application deadlines, and the date by which a decision will be made.

That's not to say that politics doesn't play a role in the decision making. Who doesn't know an unworthy organization or individual that's received government funding for political -- not merit -- reasons? And although government is visible on cable TV, open meetings, transcripts, and the opportunities for personal testimony, government can still find ways to be opaque. But, compared to philanthropy, it's much more transparent.

And government often must bring a sharp sense of urgency to its work. For instance, when the state suddenly closed down a childcare center in a low-income neighborhood for misreporting financial data, we in local government had to figure out where those kids were going to go tomorrow so that their mothers weren't dinged by welfare-to-work requirements.

When a nonprofit drug abuse clinic imploded, my colleagues in the public health department had to somehow maintain those services. It didn't matter that the nonprofits' troubles had nothing to do with local funding or oversight . . . it had to do with the fact that the people impacted were San Franciscans with minimal resources, and local government is the safety net, as imperfect as it might be. A key underlying difference is that local government has real responsibilities for the community; its failure to act responsibly and timely has real-life impact.

In most of philanthropy we aren't responsible in the same way. So, for example, even if a foundation had a grant to that same childcare center, it wouldn't necessarily feel responsible for making sure those parents had a place to take their kids the next day. It's not that philanthropy should be the same as local government. I get that we play different roles. But philanthropy definitely has things to learn from its public sector counterpart.

With less accountability, shouldn't foundations be more willing to take risks than government?

Yes! The implication is absolutely that we should be more willing to take risks. Part of my old job was running a community development loan fund, and I learned the importance of balancing risk in a portfolio. If every business we made loans to was successful, then we knew we weren't reaching the people who most needed our community development money, that we probably weren't making loans to all of the right people.

From what I've seen, most foundations don't usually look at risk in balancing their grants portfolios. As a sector, we are more risk averse than our governmental counterparts, and yet have less reason for being so.

A notable exception is in the arts, where nonprofit arts organizations rely far more on philanthropy (both individual and institutional) than do health, human services, or education. Foundations -- including ours -- often explicitly invite high-risk work in the arts where governments (NEA, et al.) shy away from anything controversial or risky.

I get that most of us rarely want to tell the trustees that a grant hasn't worked out, as it somehow may reflect on the quality of our due diligence. But this aversion to risk disadvantages a lot of great organizations from getting philanthropic funding. It certainly ends up working against grassroots organizations taking on important work in their communities. These organizations may have real traction, real relationships, a great strategy, but "success" may be elusive. In our search for impact, I worry that we often don't calibrate the metrics we use to gauge success with the enormity of the problems we're trying to address. So our time frames are too short, our expectations unrealistic, and our capacity for risk too low.

And even though we know from our own lives how much can be learned from failure, we have a hard time being open about it in philanthropy. We forget that failure doesn't necessarily equal a mistake; sometimes you have to mess up a few times before you figure out the right path. Though there's more conversation about sharing our failures than in the past, it's still not the norm in philanthropy. As a result, I think we miss out on the ability to learn from our own and each others' work, and we limit our effectiveness unnecessarily.

In the San Francisco Bay Area, if you add up the grants made from their own funds by the four community foundations (San Francisco, Silicon Valley, Marin, and East Bay), that combined amount is about 10% of the amount spent by just San Francisco's Health Department. How do you think about the huge difference in scale between government and philanthropy?

The analogy that jumped into my head my first few months on the job was the flea and the elephant. Philanthropy could be a smart flea on the government elephant, biting it to move a little this way or that. The problem is when philanthropy forgets that it's the flea, and thinks it is the elephant.

My particular pet peeve, given my background in community organizing and community development, are foundation-driven "comprehensive community change" initiatives. Philanthropy puts a couple million dollars over a few years into a neighborhood and expects transformation. Look at the total of public (government) resources going into that same neighborhood for schools, clinics, buses, Medicare, social security, and everything else. What percentage of funding is added by that foundation? How important is it to the neighborhood, truly? What is the partnership with the public sector? You need to understand the real drivers of change and the real dynamics in a community before you can figure out the right role for philanthropy.

An example?

One that comes to mind is a very diverse and very low-income neighborhood that a large private foundation decided, admirably, to focus on. But, separate from the philanthropic resources, a lot of other factors were at work. The neighborhood was divided along racial lines, and the existing nonprofits were weak and ineffective. Deep gang rivalries rooted in some horribly deteriorated public housing led to high levels of violence, traumatizing and destabilizing the neighborhood.

Attempts to build nonprofit capacity in this setting, and adding some social service and economic development programs to the neighborhood mix proved largely ineffective. What did start to change the neighborhood was when public transit was reconfigured by the local authority to provide more direct connections to the downtown core: something completely out of the realm -- and budget -- of the philanthropic approach.

Sadly, I find that comprehensive community change initiatives driven by foundations are rarely that because they don't address the full complexities of the neighborhood or work effectively with local government. It's a classic flea/elephant dilemma.

You sound wary of philanthropy's ability to drive community change.

I am, but I wouldn't be here if I thought philanthropy couldn't do a thing. Philanthropy is critical in supporting community change, social change. But, and I know some of my colleagues won't agree, I don't see philanthropy as the driver of change. I see philanthropic resources -- both intellectual and financial -- as incredibly important, but when we forget we're the flea, not the elephant, philanthropy can make tremendous miscalculations.

Philanthropy can also miss the boat when, in the quest for doing something it can own or brand, it doesn't build on existing infrastructure and knowledge.

Look at public education. There's a lot of agreement in the field that having effective principals and teachers is key to improving academic outcomes. So you'd think we'd start working together to resource the organizations already doing great work developing and supporting principal and teacher effectiveness. Instead, way too often, philanthropy is driven to craft brand new initiatives and fund new organizations, rather than investing in the people and organizations already doing good work in an arena.

So what should philanthropy be doing?

First, if we're serious about community change, we can't do it without the community.

And the community is political, messy, personal, complicated. We have to be willing to work with the messiness and complexity if we're serious about supporting real change. This means we have to be willing to take risks and to fail. We also need to understand and build on the existing infrastructures in communities wherever possible, rather than just ignore or overlay them with new ones.

Second, we need to have effective relationships with government, particularly on the local level. Usually we in philanthropy see government as a grantee at best. And government, proving our worst fears, often sees us as a checkbook. We need to invest time and money into partnering with government, understanding its issues and challenges, challenging it where need be, and supporting its most promising work with both human and financial capital. We can indeed be really smart fleas and figure out when to bite the elephant on the ear.

And, yes, part of our role should be R&D: supporting innovation when it really adds value, helping make good work great, investing in leadership and strengthening organizational infrastructure. What we have to remember is to ask of those on and near the frontline: What would be helpful? What would be meaningful? Too often we predetermine answers to those questions only later to bemoan the ineffectiveness of our interventions.

What if a community doesn't have a strong infrastructure? For instance, if the nonprofits there are mostly small and weak?

It's a challenge; there isn't a silver bullet here. As funders, we have very, very limited ability to support change if we can't identify grantees doing great work in our areas of focus. Yet, we [foundations] don't really know how to build capacity in communities that don't have strong nonprofits. It's not that we don't try, we're just not very good at it.

And, in the absence of strong nonprofits, we usually don't have the patience to invest in promising individuals and informal networks that might, over some period of time, become great and effective. But that is what we often need to do: take risks with people and nascent organizations.

And, most important, we need to be real: about what our role is, about the relative impact of our grantmaking given the broader conditions and context, about how long it may take to see signs of change, about the ups and downs that will probably occur in the process. We need to be real with ourselves, with grantees, and with our trustees. Overpromising is damaging, and can end up making us even more risk averse.

Last comments?

Honestly, I often think we [philanthropy] shouldn't be allowed to develop our own initiatives, at least as they relate to community change. Foundation-driven initiatives can be beautifully crafted, and have their own internal logic. But they are often based on a fundamental mistake: that philanthropy can be the prime mover of community transformation. It's all about understanding our role and relationship -- to nonprofits, to government, to community.

We in philanthropy can effectively support social change, and effectively support the community leaders and organizations that are change agents, but we can't substitute for them or invent them. At heart, I guess I'm still a community organizer. I still believe in our ability to make change, but it's about making change with, not to, a community.

In support of the mission of the Walter & Elise Haas Fund, and her goal to be a smart flea, Pam is currently sitting on the steering committee of Hope SF, a public-private partnership to rebuild some of the city's most distressed public housing. Overall, the Haas, Sr. Fund brings a civic engagement frame to its work in the areas of the arts, public education, economic security for the working poor, and Jewish life. You can learn more about what they do at www.haassr.org. At right, Pam "organizes" Frances and Clancy.

Comments

Bravo to Pam for being candid and thoughtful! It is so refreshing to hear her perspective. I might add that, unfortunately, most foundations to not adhere to Pam's perspective for two reasons. One, the staff are well educated but too inexperienced to know what they don't know. Two, the relationship of the board to senior staff is critical to the kinds of conversations that should occur around grantmaking in general and risk-taking grants in particular.

Thanks to Ms. David for a refreshingly honest and accurate assessment of foundation-based comprehensive community change initiatives (CCIs). It validated a very difficult personal experience.

I have spent the bulk of my career in the non-profit arena. I also spent about 5 years doing very rewarding foundation work. Based upon that experience, I was recruited to take over a comprehensive community change initiative at a local foundation a few years ago. I realized immediately that there had been critical mistakes made in the development of the initiative—from the selection of the community, to the relationship with the small low-income city where it was centered, to the “theory of change.”

I did my best to right the ship, but the foundation leadership would not listen to my recommendations—primarily because they didn’t have the experience (they didn’t know what they didn’t know about working in communities) and ego. Not only was I unable to convince the foundation leadership to make the necessary changes in the initiative, I was ostracized for insisting that things had to change for any measure of success to be achieved. In light of the situation and out of concern for my professional reputation, I quit.

Needless to say, I was shocked and shaken by this experience. Two of the largest foundations in my state have initiated their own CCIs in the last 12 months. The one that is furthest along is experiencing problems—on a fairly large scale. There seems to be a form of denial at work in parts of the foundation world—ignoring the history of failure of past CCI initiatives and moving forward regardless. It doesn’t seem to matter that there isn’t a sufficient body of evidence to demonstrate the effectiveness of these costly initiatives.

Thank you again for validating my experience and giving voice to the fact that there is an elephant in the philanthropic living room. It is a tragedy that the most vulnerable communities and the non-profits that work on their behalf are the ones who suffer the brunt of these massive mistakes. We will be lucky if these large foundations can make their way out of these ill-conceived initiatives in the next 8 to 10 years. I am glad that the Haas Foundation and those who listen to Ms. David won’t be joining them.

I have been a participant and close observer of the Hewlett Foundation Neighborhood Improvement Initiative, the San Francisco Foundation Lifeline Initiative, the Haas Jr. Beacons Initiative, and the East Bay Community Foundation's Capacity Building Initiative. All of them beefed up the staff of the foundations, did basically NOTHING for the communities, and left nothing behind. F*** foundation initiatives.

What's your solution? What do you think has been missing that would work? What is to be done for those in need? What would your "effective" Comprehensive Community Initiative look like?

Or do you just like naysaying? It is easier (and lazier) to know what you're against, rather than finding out what you are for, and committed to... What are your suggestions (for instance, if I am a trustee of a large foundation, and right here am soliciting your thoughts, and offering you an opportunity to have input?)

These comments seem to overlook one of Ms. David's main points: that philanthropy needs to be more aware of the role of government in whatever arena philanthropy is working. This is particularly noticeable in public education, where corporations and foundations try to "fix" public education with laughably small amounts of money.

Foundations only seem to notice government when government thinks about regulating them. If you're trying to change a neighborhood, doesn't it make sense to work with the mayor and the city council in trying to do so?

Very insightful comments. From my perspective as a fundraising consultant to the non-profit sector, and as a local elected official (City Council), I find that both government & the philanthropic sector need to do a much better job of communicating their expectations of funding/program outcomes, with each other and with their shared constituences. Better planning and stronger, sustainable collaborations may likely result, with more effective leverage of local and regional resources, and thus a healthier, long-term impact on community issues.

As a nonprofit executive director, I have some resistance to the description of so many nonprofits being weak and ineffective! Really?! If you were to take the time to talk with the people initimately involved in them, you might find a fairly balanced self-assessment of strengths and weaknesses. Very often some of the weakness have to do with lack of funding.

Your article offers ideas and heartfelt advice, but I'm not sure I agree with the premise from which you begin...

This is an excellent account of the approach taken by many foundations. It did, however, make me quite proud of the foundation for which I work, particularly related to how we approach our relationship with both the school district, local/state government and the community. Most of this can be credited to how our CEO manages the foundation, which is big on funding and small on staff, with little to no bureaucracy. All of this to say there are foundations that take the exact approach and considerations Ms. David speaks of...right here in the often overlooked Midwest.

Thanks so much for sharing your perspective. It is still refreshing and rare for foundations and their leadership to engage in this kind of transparency -- explaining what they think and why at a level deeper than web-site mission statements or published grant-program priorities. We'd welcome hearing from more philanthropic leaders on this topic.

In a future article I would like Ms. David to address the debate about "community maintence" vs. "community transformation." In my experience, many foundations want to "cure the problem" and thus look critically at organizations that are "just treating symptoms." My organization provides medical and dental services, sometimes life-saving ones, to low income people. We have limited ability to "fix" poverty or health insurance, but we still provide desperately needed services to clients who can't wait for a long-term solution. I agree with Ms. David that too many foundations start grandiose, visionary efforts to transform things without considering the short-term human costs that may occur while waiting for transformation that may or may not be successful.

Along these same lines, a foundation's love for sophisticated outcome measures can be counterproductive in some situations. Sometimes I think foundations have too many PhDs and other theoretical types that want to make the process more and more academic or complex. It has been a pleasure to work with religious funders and programs who just want to relieve human suffering even if they can't prove that the effort is delivering societal benefits beyond the people served. In some cases, isn't relieving human suffering a sufficient outcome in itself?

foundations exist on money from tax-dodge schemes, their minor donations to make their boards feel good about themselves rarely help the larger community and only perpetuate the "Poverty Pimp" stereotype of foundations!